Natural gas prices rose to a multi-year high as Hurricane Ida disrupted US gas production and robust demand ahead of winter.
US natural gas futures traded at USD4.61 per million British thermal units (mmBtu) in Asia on Thursday, 2 September. The futures have steadily traded at USD4.7 per mmBtu on the previous day for the first time in nearly three years.
“Natural gas explorers in the US Gulf of Mexico refineries remained offline while energy firms evaluated the aftermath of Hurricane Ida. However, the demand is likely to remain strong as hot weather is expected to stay until early September,” Tradingeconomics wrote.
Ida knocks Gulf of Mexico output
The US Bureau of Safety and Environmental Enforcement estimated 83.21% of the gas production in the Gulf of Mexico has been shut-in after Ida – a category four storm – ravaged oil and gas platforms in the Gulf. According to the Energy Information Agency, offshore gas production from the Gulf of Mexico accounts for 5% of total US dry output.
Natural gas prices in Europe rallied as the continent is facing a shortage amid uncertainty in supply from Russia, Europe’s biggest supplier. Russia is completing the Nord Stream 2 gas pipeline construction to Germany.
“Tight supplies of LNG (liquefied natural gas) in Europe is going to keep US exports high and desirable. However, US production continues to falter as demand grows, so we have a very bullish outlook for winter,” Phil Flynn, an analyst at PRICE Futures Group wrote in its daily energy report by email.
North Asia LNG prices rally
Analysts at ANZ Research noted that the supply crunch in Europe pushed consumers into the Asian market, sending North Asia LNG prices to rally. Buyers scrambled to buy the fuel ahead of winter in the northern hemisphere.